Texas Securities Cases: Austin Investment Adviser to Pay Over $715K to Settle Cherry Picking Allegations and Dallas-Based Oil and Gas Company is Accused of $95OK Investor Fraud

Valor Capital Asset Management LLC and its owner, Texas-based investment adviser Robert Mark Magee, have settled US Securities and Exchange Commission charges accusing them of defrauding investors by engaging in cherry picking. As part of the settlement, Magee is banned from the securities industry and will pay over $715K.

The SEC contends that while trading securities in the firm’s omnibus account, Magee would wait to allocate the trades until after watching their performances throughout the day. He would then allocate a disproportionate amount of the more profitable trades to his accounts while sending the trades that were not profitable to his clients. This allowed him to profit at cost to clients. The SEC believes that his ill-gotten gains from cherry picking was over $505K.

For example, notes the SEC, the way in which Magee traded and allocated El Pollo Loco Holdings is “representative” of how he allegedly engaged in cherry picking. For five trading days in a row, trades in LOCO that were profitable went to his own account. When the price went down on the sixth day, he allocated the shares to six Valor client accounts instead of selling the shares at a loss.

Magee allegedly cherry-picked trades over three years. In 2015, the broker-dealer that Valor used to execute the trades ended its relationship with the firm because it suspected that the investment adviser was cherry picking. A few months later, a second brokerage firm ended their relationship because it had the same suspicions.

Texas Oil and Gas Fraud Allegedly Defrauded Investors of $950K
The SEC has filed oil and gas fraud-related charges against Americrude Inc., a Dallas-based company, and its owner Shezad Akbar. The regulator believes that the Texas oil and gas company, Akbar, and Americrude nominal President Daniel Waite defrauded investors of at least $950K through fraudulent securities offerings.

According to the regulator, investors were defrauded through seven securities offerings that were supposed to raise money to obtain” “working interests in oil-and-gas prospects.” Instead, Akbar and his company misappropriated and improperly used over $196K on entertainment and retail costs, as well as other expenses. Investors only got back about $2.5K of their principal.

Both of them and Waite are accused of pursuing prospective investors using high-pressure sales tactics, cold calls, and making false and misleading statements, including misrepresenting Americrude’s record of success, the potential of the prospects, and for what purpose the proceeds would be used. Akbar also allegedly used an alias so that potential investors wouldn’t find out about his previous felony convictions and so his involvement in the Texas oil and gas offering fraud would stay concealed.

Waite has settled the SEC charges without denying or admitting to them. He will pay over $32,400 of disgorgement of ill-gotten gains, more than $1.7K of prejudgment interest, and a $100K penalty.

Please contact our Texas securities fraud lawyers so that we can help you explore your legal options. Over the years, Shepherd Smith Edwards and Kantas, LTD LLP has worked with thousands of investors in successfully helping them to recover their investment losses.

The SEC Order in the Valor Capital Case (PDF)

The SEC Complaint in the Americrude Case (PDF)

More Blog Posts:
Three Companies and Their Principals Accused of $11.7M Texas Oil and Gas Offering Fraud, Stockbroker Fraud Blog, February 28, 2018

Houston Technology Company is Accused of $28M Texas Securities Fraud, Stockbroker Fraud Blog, December 26, 2017

Fund Manager Accused of Losing $178M in Residential Mortgage-Backed Securities is Barred from the Industry, Institutional Investor Securities Blog, February 16, 2018

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